Elephant Park - a populist narrative

Overseas investors and the Heygate estate

Are you a) someone in Southwark in desperate need of a home?
or b) a property investor in Hong Kong or Singapore?

If a) join the lengthening council waiting list for a council home, if
you can.

if b) welcome to the Elephant and Castle, there is a good investment
opportunity waiting for you.

This is the conclusion of our own investigation into who will live on the new
Heygate estate. It was prompted by recent press apologetics for gentrification.

First up, Guardian columnist, Labour hack and gentrification
advocate
Dave Hill, has written an
article
claiming that foreign buyers have been wrongly scapegoated for the high cost of
housing the capital.

The article refers to research being commissioned by City Hall, which is
attempting to address not only ‘concerns about the role that overseas money
plays in London’s property market’, but also “the positive role that overseas
buyers play in enabling developments to go ahead.”

Hill dismisses the ‘populist narrative’ around overseas buyers and argues that
“a considerable amount of London’s new “affordable” homes aimed at people on
low and middle incomes, are built as a condition of permission being granted
for large, foreigner-financed housing schemes to go ahead. “

Dave Hill is quite right; planning permissions are often given on condition
that affordable housing is built, but unfortunately the promise is seldom kept.

This has been amply demonstrated by London Tenants Federation’s
analysis
of the latest available figures on affordable housing delivery, which shows
that less than 1 in 5 new homes being built are affordable and only 1 in 10
social rented - half the London Mayor’s target in both cases.

The Evening Standard has recently provided us with a case
study of one such ‘foreigner-financed housing
scheme’

Elephant Park (Heygate as was). A perfect test, we thought, of whether
gifting public
land
and resources to private developers actually delivers affordable housing.

South (East Asia) Gardens

The latest phase of Elephant Park is South
Gardens
which has 360 homes. Above is plot H06 (D,E & F) otherwise known as ‘South
Garden Point’. It comprises two blocks with 179 apartments, all for private
sale. The UK sales launch began this
week,
with prices starting at £550k, but it’s really just to mop up what’s left from
the Singapore sales which started on 11th April
2014.

Riseam Sharples began travelling to Hong Kong and Singapore in the 80s and 90s
with the aim of helping ‘offshore investors to get a
bargain’.
Riseam Sharples also has a commendable policy of registering clients’ purchases
with the Land Registry, even though such registration is not required or
normally effected until the development is completed. The 46 buyers are
Registered in the Land Registry
deeds as
at Riseam Sharples HQ (2 Tower St, WC2H 9NP):

Extract from Colliers Singapore sales brochure

Total Gain International

While one of the Colliers buyers listed in the Land Registry
deeds is clearly an asset management company, appropriately called ‘Total Gain International Ltd’, we cannot categorically state that the remaining 45 buyers are also investors, but a google search brings up possible links to the following companies:

Assets not homes

Leaving all this aside, there is no doubt that these properties are being
marketed as investment assets - not homes. This is clear from the sales
information that Lendlease supplies to potential buyers. They very helpfully
estimate that the cheapest of the remaining flats at South Garden Point will
earn you a healthy rental income of £22,360 per year. So if you have got £430
per week to spare and need a 1-bed flat, head for South Garden Point.

The other side of the coin - affordable housing

What about the affordable housing at South Gardens? The Evening Standard
article argued that while 2-beds in Elephant Park might be selling for £1m, locals could
nonetheless pick up an ‘affordable’ shared ownership flat for just £111,250
(for a 25% share of a 1-bed).

If the Standard had looked at the small print of the price
list,
they would have seen that out of total 360 homes in ‘South
Gardens’
only twenty five were available for shared ownership and only 7 were still
available1. The same small print in the price
list
also shows that a minimum deposit of £30k is required and a minimum income of
£42,918. We can assure the Evening Standard that there are not many at the
Elephant and Castle who will be ‘reviving the dream of home ownership’ at
these prices.

So it is not the populist narrative that is false as Dave Hill suggests, it is
the deluded pro-gentrification narrative, which suffers from two
misapprehensions; that affordable housing is actually affordable and that
developers are actually building it.